Site Vs. Location

[BENNY JEFFUS]

I place a bracket sign after location and another bracket sign after site in the sales grid and make a combined adjustment as I have never had enough data to separate a location/site adjustment. I then explain in comments that site and location differences are made as a combined adjustment based on the net difference in underlying land value.

 

[Austin]

If all of the sites are improved to their highest and best uses and you make adjustments based on size and location, I think you are making a serious mistake. If the highest and best uses are the same, excluding excess land that could be sold separately, I think you would be challenged to make these adjustments with market support. Unless the improvements are cookie cutters.

$1,200/ac land and $5,000/ac land do not have the same highest and best use. They are not even comparable to begin with so on what basis do you make adjustments? Can you adjust an orange to taste like an apple?

 

[BENNY JEFFUS]

In addition I indicate on the sales grid, location as being superior, equal or inferior.

 

[xm72mhd]

Originally posted by Mike Garrett, RAA@Nov 13 2005, 09:03 AM
No kissing up Edd....I am still not buying you a drink at the meeting! I want you perfectly sober while sitting next to Stewart :rofl:

I can't imagine being sober, let alone doing it next to Stewart.

 

[xm72mhd]

Originally posted by Richard Carlsen@Nov 13 2005, 09:07 AM
All I can say is what I say in every appraisal I do:

"Site value adjustments in the grid are based on site net values and not on size or frontage alone."

The adjustment is made to what the comps and subject's site is worth "as vacant".

So what's the difference, better dirt?

 

[Christine Marie]

because land value is reflected in location adjustment, and adding an extra kicker for site value would be double dipping.

interesting post...... in general, do [peers] also adjust for square footage and room count, to me that is a double dip..... Curious?????

 

[Richard Carlsen]

Sq footage is one aspect of the grid adjustments.

Room counts such as 2 full baths over 1 bath are adjusted based not on sq footage but increased utility/desirability as noted in the market. All adjustments that have to do with rooms are based not on sq footage but essentially on utility as seen by the market. The sq foot adjustment does not take this into account.

In a given size house, say 1200sf, pure adjustments for room count such as an adj for 7 rooms vs 6 rooms are not appropriate. You are adjusting for count only and forgetting that the 7 rooms will necessarily be smaller which may lower the utility. Very hard to prove in our market that 7 rooms are more valuable in a given sq footage than 6 rooms. The same is true for 4 bedrooms vs 3 bedrooms. Tough call and one that I do not make due to lack of sufficient data.

 

[xm72mhd]

Originally posted by christine t. richards@Nov 13 2005, 09:45 AM
interesting post...... in general, do [peers] also adjust for square footage and room count, to me that is a double dip..... Curious?????

Well what if you have a comp that is smaller, but has more bedrooms and your market says bedrooms not GLA is king or a combination thereof. Maybe the answer is, "It depends on your market". But, if you are adjusting against a larger comp and you adjust both GLA and rooms I'd say you may be kicking the dog twice, but maybe not.

 

[hastalavista]

I don’t think there is one “right” answer to this.
For me, the grid on the pre-printed form is there to provide a visual representation of the similarities/differences between the subject and comparable sales. The adjustments on the grid provide the reader with a “snapshot” of the market analysis. If we were doing narrative reports, we might decide to deal with site size and location influences in the same paragraph or even same sentence (perhaps under the heading “site value influences”).

What I think is important is not to mix apples and oranges on the grid. For example, I wouldn’t want to have a positive lot size adjustment cancel out a negative location influence reflecting a “similar” rating; that would be misleading.

 

[xm39hnu]

Thanks for all the insight and replies. Tracy read them, too, and agrees with you that she's right.

Originally posted by Austin posted...
$1,200/ac land and $5,000/ac land do not have the same highest and best use. They are not even comparable to begin with so on what basis do you make adjustments? Can you adjust an orange to taste like an apple?

Highest and best use as vacant is to improve the properties. H&BU of excess land is undetermined at this point. So compare the two tracts. Subject has 11 acres ± of excess land. Comp in S/D has the same HBU as vacant, and does not have any excess land (compared to other homes in the tract.)

What are the typical uses of rural excess land? 1) Recreation; 2) Small ag uses--pasture, woodlot, truck garden, or just open space; 3) Development into building sites.

Which use returns more profit? 1) Recreation, $0; 2) Small ag -- $0.02; 3) Deveolpment, .... well in this market, $0. Too much competing land available.

So I've got the first five acres of a rural site having an as-vacant HBU of "improve," and the excess land at "leave vacant due to market competition." The Comp's HBU as-vacant is "improve."

Subject and comp as-improved HBU are both "to continue present use as SFR."

So, Austin, where's the conflict in HBU? Why are these "apples" and "oranges?" Why are they "not even comparable to begin with" when they have the same HBU conclusion?

Look at your own market, and find me some property on the "wrong side of the tracks" which has HBU of SFR (as improved.)

Now find me another one adjoining the 9th fairway at the local golf club. Same HBU? If so, you can compare them. They may not be "most similar," but they can be compared, no matter how large the adjustment or unreliable the results.

The reason this topic even surfaced is because our comps seldom cross the line between rural and suburban/zoned. But this beastie was unusual: No sales in the last two years of property having a GLA between 2,500 and 3,000 sqft. Plenty of them less than 2,500; an astonishing number 3,300 or better. But no sales of houses anywhere near the subject's 2,800. We used five out of nine sales. The other four were 1) Bank repo; 2) One trashed out trouse; and 3) two with 9' ceilings and premium finish on manicured lots; both were also over 3,500 sqft and 2-story.

The five we used were ugly enough.

And, as I said, I didn't give much (if any) weight to that S/D comp, and said so in the report. Had two pages of explanation of adjustments, and an abject apology in the cover letter for not being able to come closer to lender's desired comps. We'll see if they can get it funded.